The Six-Letter Word Changing West Loop Retail
You guessed it: Google. Effects of the firm’s imminent relo to 1K Fulton reach farther than the office and apartment surge. Where will the techies buy T-shirts and refuel between coding sessions? We’ll answer that question and more at our Retail Summit next week.
A West Loop land grab
First Western Properties VP of acquisitions and retail leasing Fahim Lakhani (above left) says there’s a land grab for prime West Loop retail spots, and restaurants and bars have been extremely active as Randolph’s Restaurant Row moves further west. (They'll take anything you got. You could probably sell your closet.) Developers are buying up property from meatpackers and industrial users for future redevelopment plays, and it won’t be long before more national tenants, franchises, and local mom and pops start sprouting, he tells us. Though it’s pretty tough for local retailers to compete, he says, since nationals can sign a lease and wait for developers to start construction when the market’s most favorable. Locals want existing space, and their expansion plans are shorter term and less flexible, he adds.
Investors eyeing the area (many paying cash to close quickly) include the usual local suspects like Sterling Bay, but the globe-spanning range even includes Chinese, Australian, and Japanese funds, Fahim tells us. (That's a really long plane ride to sell sweaters.) They’ll hedge some of the burgeoning West Loop’s inherent risk by negotiating short-term leases with properties’ current occupants. The strategy: Let the industrial user stick around a couple years, jump-start those returns, then readjust accordingly (develop, re-tenant, extend lease) when the area really starts booming, he says. Fahim just did a lease in the neighborhood for Mas, a Latin restaurant and bar opening at 800 W Washington. A big Bulls fan, he’s hoping we’ll meet the Heat in the conference finals to deliver a well-deserved trouncing. First Western’s president and managing broker, Paul Tsakiris, will be featured on our Tuesday retail panel.
A retail metamorphosis
While malls remains a core business line, JLL Retail is rapidly expanding its brokerage practice and reinventing its platform of service offerings, says Midwest retail market lead Larry Kilduff, another featured panelist at our event. (Celeb chameleons like Prince and Madonna should take note.) While the firm will continue to operate its mall business, the local focus will now incorporate retail tenant rep and agency leasing. Significant apartment construction in the city is a telltale sign that urban retail’s next to soar, he says, and it's great news for Michigan Avenue. This year’s interesting question mark: the 28 orphan Dominick’s locations still on the market. Those with too much grocery competition nearby could turn into movie theater concepts, athletic clubs, or multi-tenant retail, Larry predicts.
City development is thin save for the New City project at Clybourn and Halsted, Larry says, but high street retail is very active thanks to investor demand (look at the Hancock reno, above, and Water Tower Place). Regus Express has been an interesting new tenant on the scene, offering client-ready meeting space from retail storefront locations, he says. The suburbs will stay slow until the distressed shopping centers recapitalize and trade, and there’s still a lot of vacancy out there, he notes. When Larry’s not at work (where his team signed 2M SF of retail listings in the past six months), you’ll find him channeling his inner Olympian and cross-country skiing around his second home in Cedarburg, Wis., or playing guitar at his home in downtown Chicago. Please join us on Tuesday for our Retail Summit to hear more!
